If you are doing an update, you might find it helps to delete pyc files:

find . -name "*.pyc" | xargs rm

You should create a settings_local.py. Most people will be able to get away with the template provided.

cp settings_local.dist.py settings_local.py

Next, sync the database and run migrations.

python manage.py syncdb --noinput

There's a problem with real databases (read: not sqlite) where south migrations are run in an order that violates foreign key constraints. See Bug # 623612 for details. Until that is fixed, you're best off running migrations in this order.